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The corporate world is rapidly waking up to the idea that alongside profit, future successes are going to rely on placing an equal emphasis on people and planet. This idea is known as the triple bottom line, a business concept that posits firms should commit to measuring their social and environmental impact.
To many, the adoption of this triple bottom line approach may seem far too idealistic in a world that has long placed emphasis on profit over purpose. However, time and time again it has been proven that you can do well, doing good. It is incorrect to view the triple bottom line as placing greater value on the social and environmental impact of business operations over profitability. What is true in fact, is that many have seen great financial return from the adoption of sustainable business practises.
Sustainability in business strategy
Environmental social and governance (ESG) metrics are commonly used to assess a company’s ethical performance. In a recent report by McKinsey it is identified that companies with higher ESG scores consistently outperform in the market both mid and long term. Although often viewed by businesses as a short-term investment, sustainability strategies can lead to long-term benefits:
- Protection of brand and risk mitigation
Instituting an effective sustainability strategy that protects both the environment and an organisation’s workers also acts to protect the company itself from any damaging incidents. On the extreme end of examples, a company would not want to be the one who allowed an oil spill or forced employees to work in unsafe conditions, a strong sustainability strategy will mitigate these risks.
- Purpose driven = competitive advantage
Sustainability does not detract from a business’s goals, the integration of purpose within a company’s mission is an effective mechanism of attracting top, highly motivated talent and subsequently driving financial success.
- Growing market for sustainable goods
A Harvard business school study found that in 2019, 73 percent of global consumers were willing to shift their consumption habits to reduce their negative impact on the planet, and that sustainable product sales have seen an increase of nearly 25 percent since 2014. Millennials are willing to pay more for a product or service with authentic social responsibility claims. By committing to sustainable products and practises, companies can gain market share through the conversion of sustainability minded consumers.
- Cooperative action can drive change
The multifaceted problem that is sustainability is not one that can be faced alone. As an individual, the idea of effecting change in a meaningful manner can feel quite impossible. This is not the case when companies collaborate to solve the world’s most pressing problems. This is not restricted to the big corporates either; in the financial services sector we have a very large part to play in the allocation of capital, which in turn will lead to a sustainable future.
Value of sustainability
Sustainability does not require a company to sacrifice profit or put the planet above success. Instead, it is now an integral aspect of successful business strategy. By integrating sustainability within strategy, success can be found because of sustainability rather than despite sustainability. Traditum as a brand are currently in the process of creating an authentic ESG strategy which should see tangible benefit to aspects of environmental, social and governance issues alike.